When is the Development Fee considered fully earned by Big Apple Bagels?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Development Fee. Concurrently with the execution of this Agreement, Developer shall pay to Franchisor the sum set forth in Paragraph 1 of Rider B hereof as a nonrefundable Development Fee which shall be deemed fully earned by Franchisor upon execution of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels's 2025 Franchise Disclosure Document, the development fee is considered fully earned upon the execution of the Area Development Agreement. Specifically, the document states that the development fee is nonrefundable and is deemed fully earned by Big Apple Bagels upon the agreement's execution.
This means that once a prospective developer signs the Area Development Agreement and pays the specified development fee, Big Apple Bagels has earned the fee and is under no obligation to refund it, regardless of whether the developer successfully opens any Big Apple Bagels stores. This is a standard practice in franchising, as the fee compensates the franchisor for granting the development rights and providing initial support.
For a prospective Big Apple Bagels developer, this implies a significant financial commitment from the outset. Before signing the Area Development Agreement, it is crucial to conduct thorough due diligence, assess market potential, and secure adequate financing. Since the development fee is nonrefundable, developers should carefully evaluate their ability to meet the development schedule and financial obligations outlined in the agreement. Failing to open the agreed-upon number of stores could result in the loss of the development fee without any operational Big Apple Bagels stores to show for it.